TY - JOUR
AU - Eaton,Jonathan
TI - A Dynamic Specific-Factors Model of International Trade
JF - National Bureau of Economic Research Working Paper Series
VL - No. 1479
PY - 1984
Y2 - October 1984
DO - 10.3386/w1479
UR - http://www.nber.org/papers/w1479
L1 - http://www.nber.org/papers/w1479.pdf
N1 - Author contact info:
Jonathan Eaton
Department of Economics
Pennsylvania State University
303 Kern Graduate Building
University Park, PA 16801
E-Mail: jxe22@psu.edu
AB - In a dynamic economy land and capital serve not only as factors of production but as assets which individuals use to transfer income from workinq periods to retirement. Static models of international trade based on the specific-factors model incorporate only the first of these. Once the second is recognized the supply of capital and evaluation of land can be derived from underlying intertemporal optimization behavior.Changes in the terms of trade and in the endowments of fixed factors do not necessarily have the same effects on factor prices and the composition of output as they do in the static specific-factors model. Changes in these variables affect both total savings and the amount of savings that is diverted toward investment in land. Results derived from the traditional static model are more likely to emerge when the sector using land as a factor of production has a higher labor share than the sector using capital. In this case the land-using sector dominates factor markets more than asset markets.
ER -